Denying Motions to Vacate because Un-named Members of Corporate Group were Separate Entities IPR2015-00808, 814, 815, 818, 819, 823, 824

In its Order, the Board denied Patent Owner’s Motion to Vacate because of an alleged failure of Petitioner to name two corporate entities as real parties in interest (RPI). Patent Owner filed similar Motions to Vacate in seven inter partes review proceedings, alleging that because at least two entities were not identified as an RPI, the Petitions should not be entitled to a filing date, 35 U.S.C. § 312(a)(2), and were therefore time-barred under 35 U.S.C. § 315(b).

The Board will “generally accept a petitioner’s identification of real parties in interest at the time of filing the petition,” and a patent owner “must provide sufficient evidence to show the disclosure is inadequate.” However, the burden remains with the petitioner to establish compliance with the requirement to identify all RPI. The Board identified several factors identified in Taylor v. Sturgell, 533 U.S. 880 (2008) relevant to the determination of RPI, including “whether the non-party exercised or could have exercised control over a party’s participation in a proceeding;” “whether a non-party ‘funds and directs and controls’ an IPR petition or proceeding; the non-party’s relationship with the petitioner; the non-party’s relationship to the petition itself, including the nature and/or degree of involvement in the filing; and the nature of the entity filing the petition.”

Patent Owner relied on “1) events surrounding a settlement meeting, 2) statements made in Kapsch-Group public documents, and 3) ‘admissions’ by Kapsch AG” in support of its Motions. The Board addressed Patent Owner’s arguments in turn.

First, Patent Owner argued that a meeting to discuss settlement of a patent infringement suit brought by Patent Owner against the Petitioner entities established that “Kapsch-Group and/or Kapsch AG control this IPR proceeding.” Specifically, representatives of Patent Owner corresponded with a Dr. Semmernegg, who Patent Owner contended was “negotiating as an executive of Kapsch-Group and/or Kapsch AG and that the Kapsch executives at the meeting would come from ‘Kapsch AG.’” However, the Board agreed with Petitioner’s interpretation, as supported by Dr. Semmernegg’s declaration, that he did not have power to negotiate a settlement and that he merely delivered the settlement proposal on behalf of the Petitioner entities.

Second, Patent Owner argued that public statements established “that Kapsch-Group controls or has the ability to control Petitioners, either directly or through Kapsch TCAG.” The Board agreed with Petitioner’s explanations regarding the several statements identified by Patent Owner. In particular, the Board agreed that: (1) consolidation of entities for purposes of “Consolidated Financial Statements” does not demonstrate control; (2) existence of a parent/subsidiary relationship alone is insufficient to establish RPI; (3) “absent some compelling reason to disregard entity separateness,” members of a corporate group should be treated as separate; (4) sharing of corporate officers does not establish RPI; (5) a statement regarding the management of “intellectual property rights” does not establish control; (6) sharing a physical address or phone number does not make a party an RPI; and (7) including a subsidiary’s employees in a parent’s headcount does not mean the parent controls the subsidiary’s participation in the IPR.

Third, Patent Owner argued that Kapsch AG made certain admissions regarding its alleged control over Kapsch TCAG and Petitioners. In particular, Patent Owner argued, among others, that “Kapsch AG provides management and consulting services to Kapsch TCAG and its subsidiaries, including Petitioners,” the entities share corporate officers, and Kapsch AG performs various services on behalf of Petitioners. The Board agreed with Petitioners “that the corporate boundaries between Petitioners, Kapsch-Group, and Kapsch AG are clear, and that the various companies are distinguishable, unlike the situations in the cases cited by [Patent Owner].”

In addition, the Board noted that Petitioners submitted evidence that “the Petitions were authorized by Petitioners’ boards of directors alone, and that Kapsch-Group and Kapsch AG have not paid any filing or legal fees in connection with the proceedings.” Thus, in light of the evidence of record, the Board was not persuaded that additional entities should have been named as real parties in interest and denied Patent Owner’s motions.